Showing papers on "Consumption (economics) published in 1973"

Is growth obsolete

Abstract: A long decade ago economic growth was the reigning fashion of political economy. Growth measures nearly always involve diversions of current resources from other uses, sacrifices of current consumption for the benefit of succeeding generations of consumers. In this chapter, the authors' measure understates economic welfare and its growth to the extent that education and medical care are direct rather than indirect sources of consumer satisfaction. They have constructed a primitive and experimental measure of economic welfare, in which they attempt to allow for the more obvious discrepancies between Gross national product (GNP) and economic welfare. The authors' adjustments to GNP fall into three general categories: reclassification of GNP expenditures as consumption, investment, and intermediate; imputation for the services of consumer capital, for leisure, and for the product of household work; correction for some of the disamenities of urbanization. The omission of leisure and of nonmarket productive activity from measures of production conveys the impression that economists are blindly materialistic.

Criteria for a Theory of Responsible Consumption

Abstract: Because the environmental crisis is so unprecedented, few business leaders know how to assess ecological implications of marketing decisions. The theory of responsible consumption offers a guide to...

The Effect of Government Subsidies-in-Kind on Private Expenditures: The Case of Higher Education

Abstract: The article points out that a subsidy-in-kind, such as below-cost education provided by state universities, replaces more private consumption of the subsidized good that an equivalent money subsidy, such as a scholarship. Indeed, a subsidy-in-kind may reduce total consumption. Empirical estimates in the article indicate that in higher education (a) about three-fourths of government expenditures substitute for private expenditures, (b) this fraction has exceeded one in a recent period, (c) a substantial part of this government-private substitution is due to the in-kind form of government subsidies, and (d) there is less government-private substitution in enrollment than expenditures.

Opportunity Cost of Time and Other Socioeconomic Effects on Away-From-Home Food Consumption

Abstract: Viewing the household as both a producing and consuming unit suggests the opportunity cost of the homemaker's time to be an important factor affecting food consumption. Opportunity cost of time is shown empirically to have a positive affect on away-from-home consumption for employed homemakers in all 12 region-urbanization classes studied. The same response is shown for unemployed homemakers in most classes. Furthermore, the estimated bias associated with income elasticities estimated without adjustment for the time input was significant in most cases. Estimated effects of income, family composition and size, and race on away-from-home food consumption are analyzed.

Some Considerations Relating to Property Rights in Man

Abstract: The existence of property rights affects the allocation and distribution of economic resources. The exclusive rights to ownership and control over assets leads to a different level and pattern of economic activity than would occur if these assets remained unowned or “common property.” While property rights are frequently subject to various constraints imposed by law or custom, within these bounds owners are free to use their resources to achieve their desired ends. Resources may be sold in an exchange of property rights, rented for a specified time period in exchange for some quid pro quo, or employed (or kept idle) by the owner himself. The owner's welfare function will include the income (or other utility) derived from use of the resource, while, for purposes of measuring national income, the final consumption of the entire population would be included.

Inefficiency and the Demand for "Money" in a Sequence Economy

Abstract: Publisher Summary This chapter discusses inefficiency and the demand for money in a sequence economy. Transaction costs represent the scarce resources used in transferring goods among agents. Even on spot markets, trade is a resource-using activity. Merely incurring such costs is no evidence of inefficiency. Efficiency will usually require reallocation; reallocation is resource-using. Inefficiency arises when such costs are incurred unnecessarily. The solution of the inefficiency is somehow to sever the temporal link between commodity buying and selling transactions while continuing to fulfill the sequential budget constraint. Money is defined as a commodity of positive price and zero transaction cost that does not directly enter in production or consumption. Rather than engage in costly futures trades to achieve budget balance at each trading date, traders use trade in money to bridge the gap in timing between desired sales and purchases. The assumption of zero money transaction cost is of course extreme but it captures the essential point: a major cost reduction relative to commodity trade.

Is Growth Obsolete

Abstract: A long decade ago economic growth was the reigning fashion of political economy. Growth measures nearly always involve diversions of current resources from other uses, sacrifices of current consumption for the benefit of succeeding generations of consumers. In this chapter, the authors' measure understates economic welfare and its growth to the extent that education and medical care are direct rather than indirect sources of consumer satisfaction. They have constructed a primitive and experimental measure of economic welfare, in which they attempt to allow for the more obvious discrepancies between Gross national product (GNP) and economic welfare. The authors' adjustments to GNP fall into three general categories: reclassification of GNP expenditures as consumption, investment, and intermediate; imputation for the services of consumer capital, for leisure, and for the product of household work; correction for some of the disamenities of urbanization. The omission of leisure and of nonmarket productive activity from measures of production conveys the impression that economists are blindly materialistic.

Aggregate Production with Consumption Externalities

Abstract: I. Two consumers, 3. — II. Many consumers, 12. — III. Varying supply price, 20. — IV. Varying marginal utility of income, 22.

Assets, Money, and Commodity Price Inflation under Uncertainty

Abstract: Financial assets produce no consumption goods. They cannot be used to satisfy such human desires as food or shelter. Instead, their value stems from claims on future consumption. As these claims fluctuate ln expected magnitude, in risk of being satisfied, and in the time until fulfillment, asset prices also vary. That much economists and men of affairs take for granted. But the precise relations between asset prices and individual expectations, risk preferences, and time preferences are not well understood. Economic tradition has assigned to financial assets the quality of"value storage." Money has received additional credit as a "medium of exchange," that is, a completely "liquid" asset; but both characteristics can be subsumed under the phrase, "claim on consumption." For example, the "liquidity" value of a currency arises from its immediate recognition.l C)ne can easily verify this by noting the differences in waiter response when paying for lunch with dongs in New York and Hanoi; or,

Aggregate demand, real national income, and the compensation principle*

Abstract: government accounts, imperfectly competitive markets), a basic tenet of the "new welfare economics" has seemed to be that if all markets were perfetly competitive, and if we had only final good consumption to worry about, then an unambiguous and essentially value-free index number comparison of real national income would be possible. We shall demonstrate in this paper that such faith has been misplaced. More specifically, we shall show that an index number comparison implies an unambiguous Compensation Principle comparison if and only if individual preference orderings are identical and homogeneous. A problem very closely related to the problem of the evaluation of real national income, and of great scientific importance in economics, revolves around the question of what observable implications for market demand functions are implied by our theory of individual consumer choice. It has long been known that the assumption that the aggregate demand correspondence is actually a (singlevalued) function is overly strong, in the absence of restrictions on the distribution -of income (and we verify this fact in Section 3). However, one might suppose that a fairly wide class of individual preference orderings give rise to aggregate demand correspondences which satisfy the revealed preference conditions (more specifically, Richter's Congruence Axiom [26]) even in the absence of restrictions ion the admissible income distributions. In Section 4 we show, however, that the class of continuous preference orderings which are "convex to the origin" (Definition 2.8, below), and which yield aggregate demand correspondences satisfying Richter's Congruence Axiom exactly coincides with the class of m-tuples (where m is the number of consumers) of identical homogeneous preference orderings.

Production, Consumption and Population in Akbar's Time:

Abstract: The Mughal empire is comparatively rich in available source material though this is to be found more in the MSS and similar ’raw’ form than in books, in which simple narrative history held the stage. Abul Fazl’s Ain-i-Akbari, C. 1595, being an exception, is thus all the more remarkable for the vast satistical information that it offers. Ever since Moreland brought out the importance of the Ain-i Akbari’s statistics for the economic historian,’ these have received attention off and on from both economists and historians. A recent contribution of considerable interest is Dr. Ashok V. Desai’s ’Population and Standard of Living in Akbar’s Time’, in the March 1972 issue of the Review. In this paper Dr. Desai has attempted estimates of crop yields, productivity per worker and level of consumption and the total population at the close of the sixteenth century. He believes that the yields then were 25 to 300 per cent higher than in 1961. He further estimates that productivity per worker was about twice as high, and food consumption substantially higher now. On the basis of these conclusions, he fixes the limits of per capita land revenue at between 58.47 and 79.56 dams. Applying these limits to the whole of Akbar’s empire and proceeding on the basis of the total revenue (jamadami) figures in the A in-i Akbari, Desai estimates that the population of Akbar’s empire was between 6 and 7 crores. This broadly agrees with the Moreland estimate

Aggregate Demand, Job Search, and Employment

Abstract: This paper presents a critical evaluation of the recent emphasis on job-search and employment-acceptance friction as an explanation for the actual causal relationship between aggregate demand and employment. Although job-search theory seems to provide a choice-theoretic basis for the relationship between aggregate demand and employment, the paper points out that prominent qualitative aspects of the predicted relationship between aggregate demand and employment are empirically unacceptable. In particular, the analysis of employment-acceptance friction (1) does not allow for layoffs and nonwage rationing of jobs, (2) predicts that cyclical variations in employment will involve countercyclical variation in real wages rates, and (3) predicts that cyclical variations in employment will involve countercyclical variations in consumption expenditures. As an alternative, the paper suggests that analysis of friction in the process by which markets are cleared can provide a more satisfactory theoretical basis for th...

A comparison of some short-cut methods of estimating real product per capita

Abstract: Several recent studies of short-cut estimates comparing real income (on a purchasing power basis) of countries are reviewed, including methods comparing real income based on indicators, like electricity consumption. New estimates are presented for 101 countries which had a tradition of conventional national income estimates in 1965, and for 40 countries without extended national income series. One conclusion from the empircial analysis was that until there exist a large number of countries for which purchasing power estimates of real income are available, it is difficult to discriminate between alternative short-cut methods using indicators, and difficult to estimate real per capita incomes of low income countries without substantial errors of estimate. The paper advocates more purchasing power estimates, and institutionalizing the collection of international prices of specified items so that abbreviated market baskets can be readily compared across countries.

Factor Income Distribution in the United States During the 1920's: A Reexamination of Fact and Theory

Abstract: The traditional economic history of the 1920's emphasizes the importance of changes in the structure of the American economy. It is argued that three structural changes—monopoly power, technical change, and income distribution—tainted the prosperity of the twenties. The main features of this explanation are easily summarized. Rapid advances in technology reduced the costs of producing output. At the same time corporate monopoly power was increasing thereby restricting the tendency for output prices to fall. In the presence of weak labor unions, the interaction of technical change and monopoly power had the result of increasing “profits” relative to “wages.” The shift in the distribution of income not only favored owners of capital but it also created an imbalance between investment and consumption. Consumption expenditures could not keep pace with investment expenditures and this tendency towards underconsumption, in turn, was one reason for the onset of the Great Depression.

Notes on the producer society

Abstract: The author criticizes economists for their uncritical acceptance of consumers’ revealed preference and tries to explain the preferences manifest in the United States by tracing them to cultural influences, especially the Puritan Ethic, and to economic factors, such as producers’ domination and economies of scale. Differences between American and European behavior patterns are sought mainly in comparative time budgets and Hawtrey’s distinction between defensive and creative consumption is revived as a framework suitable for such analysis.

Economic development, foreign aid, and neoclassical growth

Abstract: This paper examines the impact of foreign aid on economic development in the context of a neoclassical growth model. Its conclusion is that foreign aid, whether in the form of capital goods or consumer goods, has a purely transitory effect on an underdeveloped country's per capita consumption (which is used as the welfare criterion) in the context of the usual neoclassical growth model; when, however, alternative assumptions (which may be more appropriate to an underdeveloped country) about the rate of population growth and the propensity to save are grafted into this model, foreign aid, in the form of capital goods or consumer goods, does have a permanent effect on an underdeveloped country's per capita consumption, if the aid exceeds a critical minimum. Section I develops the properties of a simple neoclassical growth model that are essential to the analysis; section II analyses the impact of foreign aid in this context; in section III, appropriate modifications are made to the simple model and the impa...

A new look at a pure theory of local expenditures

Abstract: The "urban crisis" is a political problem caused in part by distortion in market operation due to jurisdictional boundaries which allow costly externalities in the production and consumption of pub...

Fruit and vegetable acceptance by students. Factors in acceptance and performance.

Abstract: The trend in consumption of fruits and vegetables per capita is down. They are likely to be the foods least accepted by school children. This survey was designed to learn factors which influence acceptance or rejection and hence possible reasons for the decline in consumption.

On the Theory of Interest.

Abstract: : The Theory of Interest is concerned with the problem of explaining (A) why economic systems have interest rates and (B) what determines the values these interest rates assume. The purpose of this paper is to give a self-contained exposition of an approach to these questions developed mostly over the past twenty years. Making use of a simplified economy in which consumption goods are produced from labor and capital, it is shown that even in a steady state under 'normal' conditions it is necessary to have an interest rate which is strictly greater than the growth rate of the labor force if the economy is to be in equilibrium meaning that supply and demand for all goods are equal. This answers (A) above. In the final section, the author answers (B) by showing that the interest rate r gives, roughly speaking, a measure of the amount of increase in future 'consumption' obtainable for a unit sacrifice of consumption in the present. (Author)

Public Goods, Increasing Cost, and Monopsony: Comment

Abstract: It has been argued recently in this Journal by Bish and O'Donoghue (1970) (hereafter referred to as B-O) that (1) when public goods are produced under increasing cost conditions consumer cooperation leads to monopsony situations, therefore, in contrast to constant cost conditions, where consumer cooperation is sufficient, consumer-producer cooperation is necessary to achieve socially optimum (Pareto optimum) consumption of public goods; that (2) hitherto, however, because public-finance theorists have examined only constant cost cases, they have failed to discover this potential monopsony problem; and that (3) since demand articulation for public goods is likely to come from individuals represented by a monopsonistic organization and increasing supply functions characterize many public-goods markets, this "neglected" monopsony problem and consequential underconsumption of public goods are likely to be of practical significance. The present paper suggests first that while B-O may be right in pointing out the possible existence of monopsony practices and resultant underconsumption of public goods and arguing that some public-finance theorists have failed to recognize them, it is logically incorrect to assert that increasing cost of the public good is a necessary condition for the potential monopsony problem to arise: the potential monopsony problem does arise in the constant cost case as well. Second, their argument lacks balance: they consider the monopsony problem exclusively, and ignore completely possible monopoly as well as bilateral monopoly situations. Third, the real difference between constant and increasing cost conditions is the absence and presence not of the potential monopsony problem, but of the potential income redistribution effect of the production of public goods: under increasing cost conditions, in contrast to constant cost conditions, the presence of income redistribution effects may well make a noncooperative

Consumer Behavior: Can Economics and Behavioral Science Converge?

Abstract: In this detailed discussion of Kelvin Lancaster's Consumer Demand: A New Approach, the author shows how Lancaster's analysis of consumption technology is probably the first instance of economic theory generating "heterogeneity" with behavioralists.